Former chairman of cryptocurrency exchange Bithumb could face jail time, here’s why:

According to South Korean news agency Yonhap, prosecutors in South Korea are seeking up to eight years in prison for Lee Jung-hoon, the former head of cryptocurrency trading company Bithumb, on alleged fraud.

The fraud case involved the sale of Bithumb’s BXA token as part of a bid by the Singapore-based BK Group to acquire the cryptocurrency exchange in 2018. As part of the purchase, Lee presold BXA tokens worth $25 million to BK Group. These coins were also sold to investors for around $45 million.

Bithumb, on the other hand, did not list BXA, which reportedly resulted in large losses for investors. These investors filed a fraud lawsuit against Lee and Kim Mo, the chairman of BK Group. The South Korean investigative authority had previously decided that Kim had no case to answer. Investigators decided that Kim was just as much a victim as the rest.

Kim Byung-Gun, the group’s leader, has also been charged with alleged fraud but is reportedly not under investigation. The summons comes on the heels of two recent police raids on Bithumb.

Kim’s shares in Bithumb were also said to have been seized by the Seoul Central District Court on Wednesday. The confiscation was reportedly supervised by accounting firm Samjong KPMG.

The sentence will be handed down by mid-December.

Authorities are seeking to convict Lee of fraud under the country’s increased punishment for certain economic crimes law. “The amount of loss is very large, especially for ordinary coin investors,” prosecutors said at a hearing at the Seoul Central District Court. On the other hand, Lee’s defense claims that the token sale follows a typical stock sale contract.

The defense also claims that Kim of BK Group is trying to avoid criminal prosecution for his role in the BXA token sale fiasco.

The court will hold a sentencing hearing on December 20.

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